PONTIFICAL COUNCIL FOR JUSTICE AND PEACE: VOCATION OF THE BUSINESS LEADER docx

Business leaders are called to engage the contemporary economic and financial world in light of the principles of human dignity and the common good.. Among these principles, we recall th

Fromthe 24th to 26th of February 2011 a seminar entitled “Caritas in Veritate: The Logic of Gift

and the Meaning of Business” was held at the Pontifical Council for Justice and Peace (PCJP), in

collaboration with the John A Ryan Institute for Catholic Social Thought of the Center for Catholic

Studies at the University of St Thomas and the Ecophilos Foundation The meeting followed the

October 2010 conference “Caritas in Veritate and the USA”, which the PCJP held in partnership

with the Institute for Advanced Catholic Studies of Los Angeles, and continued its study of business

organizations in light of Pope Benedict XVI’s social encyclical Caritas in Veritate Underlying both

meetings is the Church’s firm conviction that every Christian is called to practice charity in a manner

corresponding to his vocation and according to the degree of influence he wields in the polis (CIV, 7).

Business men and women, university professors, and experts on the subject contributed to “Caritas

in Veritate: The Logic of Gift and the Meaning of Business” in an innovative way Their discussions

centered on a volume of texts, previously prepared and published, which facilitated the debate that took

place during the three-day seminar at the Pontifical Council for Justice and Peace

The working days were intense and profitable Indeed, the meeting resulted in the resolution to write out

a kind of vade-mecum for business men and women, a handbook to be utilized by professors in formative

moments and for instruction in schools and universities This is the way in which the reflections

contained in this volume, “The Vocation of the Business Leader”, came to light The volume is intended

to be an educational aid that speaks of the “vocation” of the business men and women who act in broad

and diverse business institutions: cooperatives, multinational corporations, family businesses, social

businesses, for-profit/ non-profit collaborations etc.; and of the challenges and opportunities which the

business world offers them in the context of intense technological communications, short-term financial

practices, and profound cultural changes

Business leaders are called to engage the contemporary economic and financial world in light of the

principles of human dignity and the common good This reflection offers business leaders, members

of their institutions, and various stakeholders a set of practical principles that can guide them in their

service of the common good Among these principles, we recall the principle of meeting the needs

of the world with goods which are truly good and which truly serve without forgetting, in a spirit of

solidarity, the needs of the poor and the vulnerable; the principle of organising work within enterprises

in a manner which is respectful of human dignity; the principle of subsidiarity, which fosters a spirit

of initiative and increases the competence of the employees—considered “co-entrepreneurs”; and,

finally, the principle of the sustainable creation of wealth and its just distribution among the various

stakeholders

In these difficult times for the world economy, during which many business men and women suffered

the consequences of crises that deeply reduced the income of their enterprises, risked their survival,

and threatened many jobs, the Church does not relinquish the hope that Christian business leaders will,

despite the present darkness, restore trust, inspire hope, and keep burning the light of faith that fuels

their daily pursuit of the good Indeed, it is worth recalling that Christian faith is not only the light that

burns in the heart of believers but also the propulsive force of human history

Peter K A Cardinal Turkson

Bishop Mario Toso

VOCATION OF THE BUSINESS LEADER

EXECUTIVE SUMMARY:

When businesses and market economies function properly and focus on serving the common good, they contribute greatly to the material and even the spiritual well-being of society Recent experience, however, has also demonstrated the harm caused by the failings of businesses and markets The transformative developments of our era—globalisation, communications technologies, and financialisation — produce problems alongside their benefits: inequality, economic dislocation, information overload, financial instability and many other pressures leading away from serving the common good Business leaders who are guided by ethical social principles, lived through virtues and illuminated for Christians by the Gospel, can, nonetheless, succeed and contribute to the common good

Obstacles to serving the common good come in many forms —lack of rule of law, corruption, tendencies towards greed, poor stewardship of resources—but the most significant for a business leader on a personal level is leading a “divided” life This split between faith and daily business practice can lead

to imbalances and misplaced devotion to worldly success The alternative path of faith-based “servant leadership” provides business leaders with a larger perspective and helps to balance the demands of the business world with those of ethical social principles, illumined for Christians by the Gospel This is

explored through three stages: seeing, judging, and acting, even though it is clear that these three aspects

are deeply interconnected

SEEING the challenges and opportunities in the world of business is complicated by factors both

good and evil, including four major “signs of the times” impacting business Globalisation has brought

efficiency and extraordinary new opportunities to businesses, but the downsides include greater inequality, economic dislocation, cultural homogeneity, and the inability of governments to properly regulate capital

flows Communications Technology has enabled

connectivity, new solutions and products, and lower costs, but the new velocity also brings information overload and rushed decision-making

Financialisation of business worldwide has

intensified tendencies to commoditise the goals of work and to emphasise wealth maximisation and short-term gains at the expense of working for the

common good The broader Cultural Changes of

our era have led to increased individualism, more family breakdowns, and utilitarian preoccupations with self and “what is good for me” As a result

we might have more private goods but are lacking

significantly in common goods Business leaders increasingly focus on maximising wealth, employees develop attitudes of entitlement, and consumers demand instant gratification at the lowest possible price

As values have become relative and rights more important than duties, the goal of serving the common good is often lost

JUDGING: Good business decisions are those rooted in principles at the foundational level, such as

respect for human dignity and service to the common good, and a vision of a business as a community of

persons Principles on the practical level keep the business leader focused on:

s producing goods and services that meet genuine human needs while taking responsibility for the social

and environmental costs of production, of the supply chain and distribution chain (serving the common

good, and watching for opportunities to serve the poor);

s organising productive and meaningful work recognising the human dignity of employees and their

right and duty to flourish in their work, (“work is for man” rather than “man for work”) and structuring

workplaces with subsidiarity that designs, equips and trusts employees to do their best work; and

s using resources wisely to create both profit and well-being, to produce sustainable wealth and to

distribute it justly (a just wage for employees, just prices for customers and suppliers, just taxes for the

community, and just returns for owners)

ACTING: Business leaders can put aspiration into practice when they pursue their vocation, motivated

by much more than financial success When they integrate the gifts of the spiritual life, the virtues and

ethical social principles into their life and work, they may overcome the divided life, and receive the

grace to foster the integral development of all business stakeholders The Church calls upon the business

leader to receive—humbly acknowledging what God has done for him or her —and to give—entering into

communion with others to make the world a better place Practical wisdom informs his or her approach

to business and strengthens the business leader to respond to the world’s challenges not with fear or

cynicism, but with the virtues of faith, hope, and love This document aims to encourage and inspire

leaders and other stakeholders in businesses to see the challenges and opportunities in their work; to judge

them according to ethical social principles, illumined for Christians by the Gospel; and to act as leaders

who serve God

1. In the Gospel, Jesus tells us: “From everyone

who has been given much, much will be demanded; and

from the one who has been entrusted with much, much

more will be asked” (Lk 12:48) Businesspeople have been

given great resources and the Lord asks them to do great

things This is your vocation In this young century alone,

many businesses have already brought forth marvellous

innovations which have cured disease, brought people

closer together through technology and created prosperity in

countless ways Unfortunately, this century has also brought

business scandals and serious economic disturbances, and an

erosion of trust in business organisations and in free-market

institutions generally For Christian business leaders, this is

a time that calls for the witness of faith, the confidence of

hope, and the practice of love

2. When businesses and markets as a whole are

functioning properly, and are regulated in an effective manner

by governments, they make an irreplaceable contribution to

the material and even the spiritual well-being of humankind

When business activity is carried out justly and effectively,

customers receive goods and services at fair prices;

employees engage in good work and earn a livelihood for

themselves and their families; and investors earn a reasonable

return on their investment Communities see their common

resources put to good use and the overall common good

is increased

3. When managed well, businesses actively enhance

the dignity of employees and the development of virtues,

such as solidarity, practical wisdom, justice, discipline, and

many others While the family is the first school of society,

businesses, like many other social institutions, continue

to educate people in virtue, especially those young men

and women who are emerging from their families and

their educational institutions and seeking their own places

in society Those who come from socially disadvantaged

backgrounds and who are threatened with social isolation may also find their places within companies Furthermore, businesses promote healthy interdependence among the peoples of different nations by promoting interaction between them in a way that is mutually beneficial They may, thus, become vehicles of cultural engagement and promoters of peace and prosperity

4. All of these potential benefits encourage the Church

to take a lively interest in business Where businesses succeed, people’s lives can be significantly improved; but where they fail, great harm can result A market economy must be based on the pursuit of the common good in freedom, but freedom without truth leads to disorder, injustice and social fragmentation Without guiding principles and virtuous leadership, businesses can be places

in which expediency overcomes justice, power corrupts wisdom, technical instruments are detached from human dignity, and self-interest marginalises the common good

5. We wish to speak specifically to Christian business leaders, who have at the heart of their work the deep sense

of God’s calling to be collaborators in creation Such leaders play an important role in advancing and bringing to life ethical social principles, drawing on the Catholic social tradition where appropriate, in their day-to-day routines We also wish to speak to all business leaders of good will who have an influence on the behaviours, values, and attitudes of the people comprising their enterprises From CEOs to heads

of teams to those with informal influence, business leaders

of all kinds play a critical role in shaping economic life and creating the conditions for all people to develop integrally through business institutions Such institutions are broad and diverse, including cooperatives, multinational corporations, small entrepreneurial start-ups, employee-owned businesses, family businesses, social businesses, partnerships, sole-proprietorships, joint ventures with government, for-profit/non-profit collaborations Some of these businesses are

most are small Some are owned by thousands of investors,

others are owned by a single person or family Some are

legally defined as for-profit entities, others, in new legal

constructs, are termed “social businesses” with a special

status Business is a diverse institution and Pope Benedict

XVI has indeed welcomed a mixing of institutional forms.1

6. The vocation of the businessperson is a genuine

human and Christian calling Its importance in the life of the

Church and in the world economy can hardly be overstated

Business leaders are called to conceive of and develop goods

and services for customers and communities through a form

of market economy For such economies to achieve their goal,

that is, the promotion of the common good, they should be

structured on ideas based on truth, fidelity to commitments,

freedom, and creativity

7. Business leaders have a special role to play in the

unfolding of creation—they not only provide goods and

services and constantly improve them through innovating

and harnessing science and technology, but they also help

to shape organisations which will extend this work into

the future Blessed John Paul II reminded us in Laborem

Exercens: “Man, created in the image of God, shares by his

work in the activity of the Creator and that, within the limits

of his own human capabilities, man in a sense continues to

develop that activity and perfects it as he advances further

and further in the discovery of the resources and values

contained in the whole of creation”.2

8. Building a productive organisation is a primary

way in which businesspeople can share in the unfolding

of the work of creation When they realise that they are

participating in the work of the Creator through their

stewardship of productive organisations, they may begin

to realise the grandeur and awesome responsibility of their

vocation

9. Businesses certainly have the potential to be a force for great good in any society, and many do live up to their moral and economic promise Numerous obstacles, however, may stand in the way of realising this potential Some of these obstacles are external to the business and its leaders usually have a limited capacity to influence them, such as the absence of the rule of law or international regulations, corruption, destructive competition, crony capitalism, excessive state intervention, or a culture hostile

to entrepreneurship in one or more of its forms Others are internal, such as treating employees as mere “resources”, treating the business itself as no more than a commodity, rejecting a proper role for government regulation of the market place, making money out of products which are not truly good, or services which do not truly serve, or exploiting natural and human resources in a destructive way

10. Chief among these obstacles at a personal level

is a divided life, or what Vatican II described as “the split

between the faith which many profess and their daily lives”

The Second Vatican Council saw this split as “one of the

more serious errors of our age”.3 Dividing the demands of

one’s faith from one’s work in business is a fundamental error

which contributes to much of the damage done by businesses

in our world today, including overwork to the detriment of

family or spiritual life, an unhealthy attachment to power to

the detriment of one’s own good, and the abuse of economic

power in order to make even greater economic gains In this

regard, the Church remains mindful of the words of Jesus

himself: “No one can be the slave of two masters He will

either hate the first and love the second or be attached to

the first and despise the second You cannot love both God

and money” (Mt 6:24) Business leaders who do not see

themselves serving others and God in their working lives

will fill the void of purpose with a less worthy substitute The

divided life is not unified or integrated: it is fundamentally

disordered, and thus fails to live up to God’s call

11. Fragmentation of this kind can ultimately lead to idolatry, an all-too-common occupational hazard of business life, one which threatens both individuals and organisations

It means abandoning one’s call to relationship with a loving Creator, as the Israelites did at the foot of Mount Sinai when they crafted and worshipped a golden calf The golden calf is

a symbol of misplaced devotion, born of a false idea of true

success.4 There are many surrogates for the golden calf in modern life They emerge when: “the sole criterion for action

in business is thought to be the maximization of profit”;5

when technology is pursued for its own sake; when seeking personal wealth, or political influence fails to serve the common good; or when utilitarian or consequential reasoning becomes dominant Each of these “golden calves” amounts

to a kind of fixation, usually accompanied by rationalization Each has the capacity to “en-trance” us as Pope Benedict

XVI says in his social encyclical Caritas in Veritate,6 and business leaders must pay careful attention to avoid the lure

of idolatry

12. The many pressures business leaders face may lead them to forget the Gospel call in their daily professional activities It may seduce them to believe, falsely, that their professional lives are incompatible with their spiritual lives

It places excessive confidence in material resources and/

or worldly success When this happens, business leaders risk valuing status and fame over lasting accomplishment, and consequently risk losing their good judgment Business leaders may be tempted, whether from self-centredness, pride, greed or anxiety, to reduce the purpose of business solely to maximising profit, or to growing market share or to any other solely economic good In this way, the good that a market economy may do, for individuals and for society, can

be diminished or distorted

13. Well-integrated business leaders can respond to the

rigorous demands placed upon them with a servant attitude,

recalling Jesus who washed the feet of His disciples

Leadership in this servant spirit is different from the

authoritarian exercise of power too often present in business

organisations It distinguishes Christian executives and

the work environment which they seek to foster In living

business responsibilities in such a manner, in developing

true servant leadership, they give freely of their expertise

and abilities In figuratively washing the feet of their

collaborators, business leaders realise more fully their

noble calling

14. An important part of the business leader’s vocation

is practising ethical social principles while conducting the

normal rhythms of the business world This entails seeing

clearly the situation, judging with principles that foster

the integral development of people, and acting in a way

which implements these principles in light of one’s unique

circumstances and in a manner consistent with the teaching

of the Faith.7 The rest of this document is organised

accordingly: see, judge, act

16. Christian business leaders must be able to “see” this

world in a way which allows them to make judgements about

it, to build up its goodness and truth, to promote the common

good, and to confront evil and falsehood The “judge” section

of this paper offers help in this kind of assessment Here the aim is to present a short summary of some key factors affecting business activity today, indicating where possible their good, bad, and context-dependent aspects from the perspective of the business leader

17. Among the many complex factors which influence business locally and globally, there are four which stand out as worthy of special mention, having fundamentally changed the context of business over the last quarter- century The first three are closely related to each other: (1) globalisation, (2) new communication technologies, and (3) the financialisation of the economy The fourth factor, (4) cultural changes —and, in particular, the challenge of individualism and accompanying moral systems of relativism and utilitarianism—may arguably present the greatest dangers to Christian business leaders There are of course many other factors which have a bearing on business today (state regulation, the role of international authorities, unions, environmental issues, work/family tensions, and more), all

of which deserve analysis, but in an effort to be succinct we will only examine these four

SEEING THE WORLD OF BUSINESS:

CHALLENGES AND OPPORTUNITIES

15. The business leader faces a world which is

characterised by a complicated mix of factors To try to

understand them, we need to follow the guidance given in

the document Gaudium et Spes of Vatican II; that is, we

need to scrutinize “the signs of the times and of interpreting

them in the light of the Gospel”.8 Some of these factors

limit what leaders can do to realise the good by constricting

their behaviour and closing down avenues of creativity

Other factors create new opportunities for managers and

entrepreneurs to serve the common good and the possibility

for new circles of solidarity to infuse our social, political,

and economic life The world around us, therefore, presents a

complex interplay of light and dark, of good and evil, of truth

and falsehood, of opportunities and threats

18. Globalisation: The emergence of a global economic

order has come to represent the most characteristic feature

of our age The term “globalisation” identifies a worldwide

process of intensification of the movement of both outputs

and inputs, especially labour and capital, bringing with it

a increasing web of social interconnectedness With the

end of the Cold War and the opening up of many emerging

markets, the marketplace for businesses around the world has

expanded enormously This has created new opportunities and

new threats Whole peoples who were previously excluded

from the world economic system can now participate in

and benefit from it Greater efficiencies have made more

products and services affordable for more people At the

same time, greater world output has been accompanied

by greater inequality in the distribution of income and

wealth, both within countries and between them Regional

economic zones, with free movement of goods and even

single currencies, encourage trade and stimulate innovation

They are not, however, always accompanied by equally free

possibilities for the movement of working people in the

search for employment Especially where there is a single

currency, the resulting limitations that national or local

governments encounter when trying to promote an effective

economic policy, especially during a localised crisis, may

put whole political systems under strain At the same time,

markets have gone from relatively culturally homogeneous

to highly diverse This is positive in that it brings different

cultures into more communication with one another, but in

the presence of aggressive competition, and the effects of a

loss of diversity through the global marketing of standardised

products, the danger of cultural imperialism should be

carefully examined Benedict XVI has summarised these

divergent forces by

observing that, “as

society becomes ever

more globalised, it

makes us neighbours

but does not make us

brothers”.9

19. Behind all these changes is the fundamental reality

that capital has acquired new freedom: no longer does it

have to account to the people in the countries where its profits are made.10 It is as if economic power had acquired

an extraterritorial status Companies are able to react to profit opportunities quite independently of their national authorities and in so doing they play a key role not only

in the organisation of the economy —but of society Thus globalisation is modifying the foundations of the economy and the polity, reducing the degrees of freedom

of nation-states: the familiar nation-state’s economic instruments are tied to a well- defined territory, whereas multinational companies can produce goods in one country, pay taxes in another, and claim assistance and state contributions in yet a third Business has become much more influential in this changed context and consequently carries the potential for great good or bad

political-20. Communication technology:11 The revolution in communications technology brought by the Internet has had significant impacts, both positive and negative, upon business management On the positive side, Internet-based collaboration is developing new products and solutions to age-old problems Such products and solutions have reduced the costs for people to connect globally New business models combine collaboration and competition in unique ways to meet needs which were previously inadequately served or completely unsatisfied Consumer/ stakeholder groups are empowered to apply pressure on global businesses and raise the profile of poor practices in issues ranging from respect for human rights to environmental protection

in poorer parts of the world This activism reduces the cost penalty born by those companies that have always aimed to behave responsibly in these parts of the world

21. On the negative side, we now live in a world of

instant gratification and an overabundance of information

In such a world, as is commonly noted, the urgent can drive

out the important Every message becomes a priority when

instant communication insists on our attention We seem to

have no time for well-studied and thoughtful decisions on

complex matters Decisions—even important ones—are

increasingly made without adequate consideration and with

too little shared information Faced with more difficulty in

preparing for and explaining decisions, leaders rely on their

experience Thus, their personal values and beliefs become

even more critical in framing their decision-making

22. Financialisation of the economy: The combination

of globalisation with its expansion of markets and earnings

and new communications technologies has brought to

great prominence the financial sector in business The term

“financialisation” describes the shift in the capitalist economy

from production to finance The revenue and profits of the

financial sector have become an increasingly large segment

of the world-wide economy Its institutions, instruments and

motives are having a significant impact on the operations

and understanding of business While the recent financial

crisis has brought about a wave of criticisms of the negative

effects of financialisation, the financial sector has also: given

millions of people easier access to credit in consumption

and production; sought to spread risk through derivative

instruments; created ways to leverage capital to make it more

productive; and more The financial sector has also produced

social or ethical funds allowing investors to support or

avoid certain industries or certain companies, with the aim

of strengthening sustainable business systems This sector

represents an important and fast-growing development that

is set to grow further after some promising results during the

financial crisis Caritas in Veritate points out that this type

of investment should be the norm: “Efforts are needed—and

it is essential to say this—not only to create ‘ethical’ sectors

or segments of the economy or the world of finance, but to

ensure that the whole economy—the whole of finance—is

ethical, not merely by virtue of an external label, but by its

respect for requirements intrinsic to its very nature”.12

23. Despite these positive developments, financialisation has contributed to a whole assortment of negative trends and consequences We will address only two—commoditisation and short-termism Financialisation has tended to completely

commoditise businesses, reducing the meaning of this human

enterprise to only a price In particular, the financial sector has contributed to this commoditising trend by equating the purpose of business to shareholder wealth maximization Shareholder value has become virtually the sole metric by which business leaders determine their performance and their worth In the current climate, the call to “maximise shareholder wealth” remains dominant and is the leading theory taught in many business schools Along with this com-

moditisation have come short-term mentalities under which

leaders are tempted to become fixated on the upside potential

of short-term success, and undervalue the downside risk of excessive risk-taking and strategic failure It is perhaps not surprising that the opportunity to acquire enormous wealth

in relatively short timeframes provides a strong incentive for dysfunctional behaviour Pope Benedict XVI has noted these dangers when he wrote: “Without doubt, one of the greatest risks for businesses is that they are almost exclusively answerable to their investors, thereby limiting their social value… [I]t is becoming increasingly rare for business enterprises to be in the hands of a stable director who feels responsible in the long term, not just the short term, for the life and results of the company”.13

MAKING JUDGMENTS:

THE IMPORTANCE OF ETHICAL SOCIAL PRINCIPLES

27. Dealing with the complex context of business described in our last section requires good judgment on the part of its leaders, judgments which are wise and rooted in reality and in truth The ability to make reasoned judgments, however, must be nurtured in the moral and spiritual culture from which business leaders come, namely their families, religion, educational institutions, and the larger communities

to which they belong For the Christian business leader, at the heart of that culture is the Gospel of Jesus Christ

24. Cultural changes: As already discussed, the

impact of new levels of contact between nations through

globalisation, and of individuals through technology, has

resulted in significant cultural change For the Christian

business leader, two related key cultural changes have been

the turn to individualism in the West and higher levels of

family breakdown than in the past Linked to a resurgence in

a strongly utilitarian view of economics and even of society,

whole populations are encouraged to focus on achieving

“what works for me”, independently of the effects on others,

with results which negatively impact family life “Values” are

seen as relative, measured by their contribution to individual

preferences and business gains Work becomes simply

a means to afford the pleasures of life that each person

chooses Rights become much more important than duties;

sacrifice for a larger good is no longer considered These

attitudes fuel the drive of top management to take a share

of the wealth created, for employees to foster an attitude of

entitlement, and for customers to foster a culture of instant

gratification

25. Fortunately, new movements and programs have been developed in an effort to take more seriously the moral and spiritual life in relation to business Faith and work groups, spirituality of work programs, business ethics training, social responsibility projects, are all helping business leaders to manage their companies in the spirit of

St Paul’s exhortation: “But test everything; hold fast what is good” (1 Thes 5:21).14 Many of these groups and movements are enabling business leaders to recognise their work as a vocation and the role their businesses play in contributing to the common good

26. There is no doubt that globalisation, enhanced communication, and financialisation can have positive consequences for the human community A healthy respect for short-term financial performance can also be positive, if

it contributes to, rather than solely drives, decision-making All these trends, however, need to be guided by ethical social principles, illumined for Christians by the Gospel, and embedded in sound cultural institutions Without such

a constant influence, societal trends risk being detrimental

to “integral human development”.15 This is where the social teachings of the Church and our belief in God’s love can offer an authentic perspective, enabling business leaders to fulfil their Christian calling

HUMAN

DIGNITY

28. This Gospel is a message of love which is found

not primarily in a theory or an ethic, but in a relationship

with Christ.16 It is this relationship, this vocation to love,

which, if we allow it to, animates and strengthens the life

of every Christian It has ethical and religious implications

for all Christians and for business leaders in particular

These implications are identified in what the Church calls its

social tradition, a living dialogue between faith, reason, and

action This tradition has grown through a complementary

relationship between authoritative teachers (Catholic social

teachings), insightful scholars (Catholic social thought),

and effective and principled practitioners (Catholic social

practice) Like all traditions, it is constantly developed,

purified, and readjusted as Christians, including business

leaders, seek discernment and excellence in their

professional lives

29. An important part of this tradition for business

has been an articulation of ethical social principles at both

foundational and practical levels, and a vision of a business

as a community of persons Together these provide guidance

for true business excellence, since they are founded on who

the human person is, and what human flourishing can be in

business, the wider community, and the world

I. FOUNDATIONAL ETHICAL PRINCIPLES

FOR BUSINESS: HUMAN DIGNITY AND

THE COMMON GOOD

30. Human dignity: At the very foundation of the

Church’s social tradition stands the conviction that each

person, regardless of age, condition, or ability, is an image

of God and so endowed with an irreducible dignity, or value

Each person is an end in him or herself, never merely an

instrument valued only for its utility—a who, not a what; a

someone, not a something.17 This dignity is possessed simply

by virtue of being human It is never an achievement, nor a

gift from any human authority; nor can it be lost, forfeited,

or justly taken away All human beings regardless of

individual properties and circumstances therefore enjoy this

God-given dignity

31. Thanks to this human dignity, each person has the right—indeed the obligation—to pursue his or her vocation and to strive for personal fulfilment in communion with others In turn, this also entails that each of us has a duty to avoid actions which impede the flourishing of others and, as far as possible, a duty to promote that flourishing, for “we are all really responsible for all”.18

32. More specifically, human beings demonstrate that they bear the image of the Creator in their capacities to reason and to choose freely as well as in their inclination

to share their lives with others (their social nature) Human flourishing, therefore, always involves reasoning well, choosing freely in accord with reason and living in society Indeed, it is only in community, that is, in communion with others, that a person can genuinely develop in ability, virtue, and holiness

33. To be sure, because each person has a transcendent destiny to share forever in the life of God, earthly flourishing will never be complete, but this does not mean that it is unimportant On the contrary, not only is earthly flourishing

an important element of a good human life, but also the lack

of material resources, as well as their overabundance, are often obstacles to, or distractions from, the pursuit of virtue and holiness

34. Common good: The social nature of human beings,

reflecting the community of the Trinity, points to another

foundational principle, the importance of the common good

The Second Vatican Council defined the common good in

the following way: “the sum total of social conditions which

allow people, either as groups or as individuals, to reach

their fulfilment more fully and more easily”.19 Common

goods are developed between human beings whenever they

act purposefully together towards a goal which they share

So building a friendship, a family, or a business creates a

common good shared between friends, family members, and

all the various people involved in a business Common goods

are possible because we are relational beings who do not only

have individual goals, and who do not only grow individually

We also participate in truly shared and common projects that

generate shared goods from which all participants benefit

The common good embraces and supports all the goods

needed to allow each human being and all human beings to

develop, individually and communally

35. Businesses produce many of the important

conditions which contribute to the common good of the

larger society Their products and services, the jobs they

provide, and the economic and social surplus they make

available to society, are foundational to the good life of a

nation and of humanity as a whole Countries which do not

have enough business activity tend to lose their best trained

people to other countries because they cannot see a future for

themselves or their families in their present situations Some

societies do not produce enough collective and public goods

to ensure human life in dignity Businesses are therefore

essential to the common good of every society and to the

whole global order They contribute best when their activities

are allowed to be oriented toward, and be fully respectful

of, the dignity of people as ends in themselves who are

intelligent, free, and social

36. Truly prosperous businesses and markets depend upon any number of contributions from the larger society From public goods such as the rule of law, property rights, free and open competition, to the provision of public goods, sound currencies and fiscal policies, to critical transportation and communication infrastructures, businesses simply cannot operate effectively outside the structures of a good society Where these public goods and elements of the common good are absent or do not function properly, businesses suffer And

it is not only upon sound government that business depends Even before the State, one needs a healthy moral-cultural environment in which to educate the young, to develop them

in skill and virtue, and to prepare them for employment Benefiting from the resources society makes available, business and commercial activities, in turn, conduct themselves so as to respect and sustain the common good

37. Businesses also support the well-being of members of society through their other key functions

At the very least, a good business carefully avoids any actions which undermine, locally or globally, the common good More positively, these businesses actively seek ways

to serve genuine human needs within their competence

and thus advance the common good In some cases they

actively promote more effective regulation on a national, international, or branch level For example, some destructive business strategies, including corruption, exploitation of employees or destruction of the natural environment, might thereby lower short-term costs for themselves, while leaving the much higher long-term costs to future generations of the local society If such strategies are legal, they create competitive advantages for less morally conscious enterprises

at the expense of more conscientious competitors, who act morally and thus incur the real, higher costs of such undertakings Such a “race to the bottom” usually cannot be overcome by individual moral engagement alone; rather it

calls for a better institutional framework for all participants

in the market

II PRACTICAL ETHICAL PRINCIPLES FOR BUSINESS

38. Respect for human dignity and the common good

are foundational principles which should inform the way we

organise the labour and capital employed, and the processes

of innovation, in a market system The deep and abiding

purpose of individual businesses and commercial systems

is to address real human needs, which is to say the relevant

needs of everyone who is served in some way by a business

In particular, there are three interdependent activities which

businesses should take up:

39. The Church’s social tradition addresses these three

interdependent activities by providing practical principles to

help guide decision-makers in the good they may do These

practical principles build on the foundational principles, and

aim to respect the multi-cultural, multi-faith situations which

are characteristic of business today They also help clarify the

vocation of the Christian businessperson and the role of a true

provision —they invent entirely new ways of meeting human needs And they incrementally improve their products and

services, which, where they are genuinely good, improve the quality of people’s lives

In contribution to the common good: 20 As the Compendium of the Social Doctrine of the Church puts it: “Businesses should

be characterised by their capacity to serve the common good of society through the production of useful goods and services”.21

Business is inherently other-centred: a business joins together people’s gifts, talents, energies, and skills to serve the needs of others which, in turn, supports the development of the people who do the work The tasks they perform in common bring forth the goods and services needed by a healthy community

“The business leader is not a speculator, but essentially an innovator The speculator makes it his goal to maximise profit; for him, business is merely a means to an end, and that end

is profit For the speculator, building roads and establishing hospitals or schools is not the goal, but merely a means to the goal of maximum profit It should be immediately clear that the speculator is not the model of business leader which the Church holds up as an agent and builder of the common good”.22

Rather, the Christian business leader serves the common good

by creating goods which are truly good and services which truly serve

WORLD

NEEDS

LD

41. The goods and services which businesses produce

should meet authentic human needs, which include not only

those things which have clear social value—such as lifesaving

medical devices, microfinance, education, social investment,

fair trade products, health care or affordable housing—but also

anything which genuinely contributes to human development

and fulfilment, ranging from simple products, such as bolts,

tables and fabrics, to complex systems such as waste removal,

roads and transportation

42. In 1931, Pope Pius XI wrote in his encyclical letter,

Quadragesimo Anno, of the importance of businesses “producing

really useful goods” for others.23 The good entrepreneur “gives

first thought to service and second thought to gain, who [ .]

employs workingmen for the creation of goods of true worth;

who does not wrong them by demanding that they take part in the

creation of futilities, or even harmful and evil things; who offers

to the consumer nothing but useful goods and services rather

than, taking advantage of the latter’s inexperience or weakness,

betrays him into spending his money for things he does not

need, or that are not only useless but even injurious to him”.24

Needs ought to be contrasted with mere wants, which might be

characterised as satisfying desires which do not contribute to

human well-being In extreme cases, meeting such desires may

even be detrimental to human well-being as, for example, in the

sale of non-therapeutic drugs, pornography, gambling, violent

video games, and other harmful products This preoccupation

with wants, often called “consumerism,” severs production

and consumption from the common good and impedes the

development of the person.25 Goods which are truly good serve

the needs of consumers in a hierarchical order; the need for

nutritious goods, for example, clearly outweighs the wants of

gambling entertainment This is an objective order, which is why

the production of goods and services must abide by truth instead

of mere utility

43. In solidarity with the poor: The production of

goods and services has “a progressively expanding chain of solidarity”, which raises several critical issues and opportunities for the business community.26 One is the importance of identifying, in a spirit of solidarity, the real needs of the poor and the vulnerable, including people with special needs, which are often overlooked by other businesses in a marketplace driven by short-term profit.27 The Christian business leader is alert for opportunities to serve these otherwise underserved populations and sees this not only as a proper social responsibility but also as a great business opportunity Developments in the field of the “bottom of the pyramid” products and services—such as microenterprises, microcredit, social enterprises, and social investment funds—have played

an important role in addressing the needs of the poor These innovations will not only help lift people from extreme poverty but could spark their own creativity and entrepreneurship and contribute to launching a dynamic of development.28